837.61351/3626e: Telegram

The Secretary of State to the Ambassador in Cuba ( Braden )

127. We have had encouraging conversations with representatives of the other agencies with respect to the proposal submitted in your telegram no. 58, January 27, 7 p.m.68 as amplified by the modification suggested in paragraph no. 1 of telegram no. 59.68 If you can obtain a firm counterproposal on the basis submitted in your two telegrams under reference with certain minor modifications, which comes from the Government and has the support of the sugar interests, the prospects of its acceptance here are not unfavorable. The other agencies have reached the point, however, where they are unwilling definitely to clear another proposal unless they know that this proposal will be presented formally by the Cuban Government as its counterproposal. [Page 157] The Department shares their view. Moreover, this procedure is exactly that which you have been advocating and operating on.

To all intents and purposes, the proposal that is outlined hereafter is the same as that outlined in your telegrams under reference which you say in your opinion “would stand a good chance for endorsement by the Cuban Government”. We have confidence that you will be able to induce both the Government and the industry to get together on this proposal and present it69 on a firm basis without any modifications. We feel that this proposal, which represents considerable improvement in the general conditions surrounding the arrangement, meets the needs of the situation, for which reason we would be unwilling to suggest any modifications to the other agencies. In other words, this proposal is not subject to any further negotiation as far as this Government is concerned.

1.
2,700,000 short tons to be purchased by the United States at 2.65, within reach of ship’s tackle, provided the labor and port conditions70 stipulated in our proposal of December 17 are met by the time the grinding begins and are confirmed by a note from the Cuban Government.
2.
The industry may produce up to 300,000 short tons of “free” sugar, without any assistance from the United States. Before selling any of this sugar, the United States will be given an opportunity to purchase. The marketing of this sugar will be limited to world markets and to the rate of 100,000 tons per semester beginning from the date of the first shipment of United States owned 1943 sugar, except by prior agreement between the two Governments.
3.
The crop will be limited to 3,225,000 short tons and the United States will oner no objection to the industry’s exporting to other markets than the United States that portion of the local production quota of 225,000 short tons which exceeds actual Cuban needs (the marketing of this sugar shall be limited as in point 2 above, so that the “free” sugar sold in any one semester will not surpass 100,000 short tons).
4.
From the production of 300,000 tons of free sugar, the sugar industry will donate 100,000 tons, without cost, to a United Nations pool for relief purposes, if constituted.
Please clarify in this connection for the Cuban Government and industry that the relief pool idea is a United Nations, not an inter-American, one. The United States and Great Britain and some of the Dominions have long been planning such a pool of consumer commodities to relieve the peoples of the world who have been suffering privations and hardships at the hands of the enemy, as these peoples are liberated. It is hoped that all of the United Nations will contribute in accordance with their individual means and abilities. No inter-American agreement or action is either contemplated or required in order to constitute this pool or stockpile.
5.
The United States will advance to the sugar industry 90 percent [Page 158] of the purchase price on June 30, 1943 on such sugars as are stored at port terminals; and 90 percent minus transportation costs to normal ports, on sugars at batey. 71
6.
The industry will bear all costs such as warehousing, insurance, et cetera, of carrying unshipped sugar, until June 30, 1944. From July 1, 1944 the United States will assume these charges, with the exception of loss of weight and polarization which will continue for the account of the industry. The Cuban Government will keep warehousing charges when assumed by the United States at a level no higher than that paid by the industry.
7.
The escalator clause continues as proposed in our memorandum of December 17,72 section 4, (a), (b), and (c), but the provision to the effect that the transaction is not entered into for purposes of profit, as described in point 4 of our airgram 713,73 shall be added.
8.
The offer of the Defense Supplies Corporation for molasses remains as stated in point 2 of the Departments telegram no. 4, January 2, 7 p.m.74 If the Cubans do not agree to the molasses terms, the DSC offer is withdrawn. However, in the latter case, this Government insists on a firm assurance from the Cuban Government and industry not to ditch 1942 United States Government-owned molasses.
9.
With respect to excess costs of movement of sugar to other than natural ports, point 3 of the Department’s airgram of January 25 stands.
10.
An exchange of notes shall be effected, as stated in point 7 of our airgram of January 25.
11.
All the stipulations of our memoranda of December 17 and December 8, 1942,75 in so far as they are not affected by the foregoing, shall be understood to prevail.
Hull
  1. Not printed.
  2. Not printed.
  3. The proposal was presented by Ambassador Braden to Prime Minister Zaydín on January 29.
  4. Methods of speeding the loading of sugar in Cuban ports.
  5. Sugar mills.
  6. Foreign Relations, 1942, vol. vi, p. 339.
  7. See footnote 65, p. 154.
  8. Not printed.
  9. For latter, see Foreign Relations, 1942, vol. vi, p. 337.